A delegation led by the Director of the International Monetary Fund’s Asia Pacific Department, Krishna Srinivasan is visiting Sri Lanka and discussing the new administration’s reform objectives, an official said.
“Program performance is strong, and reform efforts are bearing fruit in terms of reviving economic growth, lowering inflation, boosting reserves and improving revenue mobilization,” Julie Kozack, Director of the Communications Department said.
“However, as we have said before, important vulnerabilities and uncertainties do remain, and this means that sustaining reform momentum is critical.”
Newly elected President Anura Dissanayake has said Sri Lanka wants to cut both value added tax and income tax.
“President Dissanayake reaffirmed the government’s broad agreement in principle with the objectives of the IMF programme but emphasized the importance of achieving these objectives through alternative means that relieves the burden off the people,” a statement after the meeting said.
“The President stated that the government plans to provide relief to those who are struggling due to high VAT and income taxes.
“The IMF appreciated President Dissanayake’s willingness to commit to the programme’s goals and agreed to discuss the alternative approaches proposed by the Sri Lankan government.”
Falling prices including in foods have boosted public credibility about the IMF program, unlike in earlier cases, though there are middle class concerns, over high-income tax rates as they were unable to pay mortgages, car leases and also school fees due to the tax hike.
Source: Economynext
